Global energy major Shell Plc has kicked off the sale process for its Indian renewable energy unit Sprng Energy and has started reaching out to prospective buyers for the portfolio, which could fetch an enterprise value of $1.6-1.8 billion, two sources aware of the development told Moneycontrol.
Shell acquired the Sprng Energy platform from infrastructure investor Actis in August 2022 for an enterprise value of $1.55 billion, and got a portfolio of 2.1 gigawatts (GW) of renewable energy assets and a pipeline of 7.5 GW. Since then Shell has invested around $100 million in the Indian unit to partly repay debt and to fund development of new assets. It has added around 700-800 megawatts of assets to the pipeline.
“Shell is working with investment bank HSBC for the proposed stake sale. The Indian portfolio could fetch an enterprise value in the range of $1.6-1.8 billion and an equity value in the range of $800-900 million,” said one of the sources cited above.
The sale process is at the preliminary stages and Shell and its advisor have just started reaching out to prospective investors.
Prospective buyers who have been reached out include American private equity investors KKR and Canada’s Brookfield, both of whom are active investors in the Indian renewable energy sector and own large portfolios of renewable energy assets.
The sources cited above said that Shell is open to selling the entire platform or just a part of it.
“They may sell the whole holding company or a part of it. Alternatively, they could also do a part sale of some assets or the entire portfolio of assets. They are open to all ideas and the final structure will depend on the offers they get,” said the first source cited above.
A Shell spokesperson declined to comment on Moneycontrol’s queries. Spokespersons for HSBC, KKR and Brookfield also declined to comment.
The Indian renewable energy portfolio is not the only such sale that Shell is contemplating.
On February 6, Bloomberg reported that Shell Plc is looking to sell part of its stake in a wind farm it built off the coast of the Netherlands as part of measures to drive more value for shareholders.
Bloomberg reported that the energy major is seeking to reduce its share in the Hollandse Kust Noord project, built in collaboration with Dutch utility Eneco NV, citing sources. Shell is the majority shareholder in CrossWind, which built the 759-megawatt Dutch offshore wind farm, the report said.
“The stake sale in Sprng reflects the new reality of energy markets following the Russia-Ukraine conflict. High oil and gas prices have meant that Western energy companies have been making huge sums of profit from conventional energy sources, driving them to refocus on these sources against betting aggressively on renewable energy,” said the second source cited above.
In June 2023, Shell CEO Wael Sawan outlined his new strategy to investors, which included cutting costs, boosting payouts to shareholders and devoting more resources to oil and gas.
The company’s shift in focus to oil and gas has attracted investors. Shares of Shell Plc hit a record high in October helped by rising energy prices and geopolitical tensions in the middle east.
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